The automatic stay stops a repossession
Filing a bankruptcy case triggers the automatic stay, which prohibits a creditor from repossessing your property while the case is pending. The stay takes effect immediately upon filing — but certain requirements, such as a credit counseling course, must be completed before a case can be filed, so you should not wait until the last minute to seek help.
Redemption
Redemption involves paying the creditor the current value of the vehicle rather than the balance of the loan. Where a vehicle is worth substantially less than what is owed, this can be a meaningful difference.
Cramdown in Chapter 13
In some Chapter 13 cases, a vehicle loan may be restructured through the plan so that the secured portion reflects the value of the vehicle. Whether this is available depends on factors including when the loan was taken out.
After a repossession
Options narrow considerably once a vehicle has been sold. If a deficiency balance is pursued after the sale, that balance is an unsecured debt, and how it is handled — including any review of the collector's conduct — is part of the conversation.
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship.